Comparable sales is a term used in real estate when analyzing homes located in the same area, Those homes are very similar in size, condition and features as the comparable home. The term “comps” is also used.
Home – buyers should look at comparable sales when deciding what price to offer for a home they want to buy. Homeowners should use comps inorder to decide on a best price for home to sell.
There are 3 main things that are important in deciding on comparabes:
Lets look at these in more details.
Location is the most important when analyzing homes and trying to decide on a home value. There is even saying “3 most important things about the house are : location, location, location“. I have wrote about the importance of location in my blog before. The real estate market is based on property location. The most effective way to analyze the property is to keep as close to the subject property as possible. It is the best to keep the comaprables and the subject properties within the same neighborhood .
If there are not enough comps near the subject home , it’s ok to look futher and expand out. But do not foeret to watch other boundaries, like a school district, and stay within it.
2. Time frame
When looking at the comps that were recently sold, the best comparable sales are in the past three (3) months. Do not go back for more than six months, because it is older data is not reflective of the current market.
The best comparables are homes that are currently “pending.”. A pending home means that a buyer and seller made a deal. Just the final sale price is not known,because the home is not sold yet.
3. Home Features:
After finding the comparable homes in a particular location and getting comps from a recent timeframe, the most important is to look for homes with similar features as a subject home. It is important to look at the prices that homes were sold.
If comparing price per square feet, it will not consider other factors,like lake or golf views, a new designer kitchen, updated new bathrooms.
When comparing home features, it is very important to look for similarities. Let say, the subject home has all four bedrooms on the top floor, look for something similar. Its is very important number of bedrooms, number of bathrooms and totl square footage of the whole house. Also, the size of the lot is very important too. Check if the basement finnished or unfinished. It is possible to make adjustments in price for diffrences , when comparing homes.